Tabcorp, the Australian gambling group, has secured exclusive rights to provide wagering and betting in the state of Victoria for the next 20 years. This new agreement, which will begin in August 2024, will see Tabcorp paying the Victorian government over AU$1bn during the two-decade period.

Under the terms of the new licence, Tabcorp will have the sole authority to conduct betting activities in Victoria, including the only authorization to take bets in person outside of racetracks. The company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) would have been $140m higher on a pro-forma basis if the new licence terms had applied for 2023.

The new licence also brings about changes for Tabcorp, as the company will no longer be required to collaborate on a joint venture with the Victorian racing industry, and current industry funding obligations will be terminated. Instead, Tabcorp will pay wagering taxes and racing and sports product fees on the same basis as other operators.

In terms of financial commitments, Tabcorp will pay a licence fee of AU$600m in June 2024 and 19 annual payments of AU$30m starting in August 2025. The company expressed its intention to fund the June 2024 payment from its existing debt facilities.

Adam Rytenskild, Tabcorp’s chief executive, welcomed the changes, stating that the new licence addresses the reform needed in the modern wagering environment and will allow the company to enhance its Victorian wagering business.

The licensing process for Victoria’s wagering licence began in June 2022, with organizations invited to submit expressions of interest. The new licence supports robust harm minimization protection measures to promote responsible gambling, according to Melissa Horne, minister for casino, gaming, and liquor regulation.

Tabcorp had a challenging first quarter, reporting a 6.1% year-on-year decline in revenue despite an increase in digital wagering turnover. The company also faced penalties in Australia, including a record AU$1.0m fine related to conduct during a 2020 Spring Racing carnival outage.

Overall, the new licensing agreement provides a significant opportunity for Tabcorp to solidify its presence in the Victorian wagering and betting market for years to come.

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